RICHMOND, Va. - (Mealey's) A group of plaintiffs in Virginia, including a private Christian university, argued before the Fourth Circuit U.S. Court of Appeals on May 10 that a lower court erred in finding that Congress acted within its power in enacting the individual mandate contained in the Patient Protection and Affordable Care Act (PPACA) (Liberty University, et al. v. Timothy Geithner, et al., No. 10-2347, 4th Cir.).

On Nov. 30, the U.S. District Court for the Western District of Virginia dismissed a challenge to the PPACA brought by Liberty University Inc., Martha A. Neal, Michele G. Wadell, Dr. David Stein, Pausanias Alexander, Mary T. Bendorf, Joanne V. Merrill, Kathy Byron and Jeff Helgeson against U.S. Treasury Secretary Timothy Geithner, Health and Human Services Secretary Kathleen Sebelius, Secretary of Labor Hilda L. Solis and U.S. Attorney General Eric Holder, finding that Congress acted within its constitutionally delegated powers under the commerce clause when it passed the employer and individual mandates contained in the PPACA.

The plaintiffs appealed, asking the court to reconsider whether Congress has authority under the commerce clause to regulate a private citizen's inactivity in commerce and force participation in commerce by mandating the purchase of a particular kind of health insurance or pay a penalty and whether Congress has authority under the commerce clause to mandate that employers offer employees a particular level of health insurance coverage approved by the government at a price the government determines to be affordable or pay a penalty for noncompliance.

In questioning plaintiffs' attorney Matthew D. Staver, the judges focused many of their questions on the definition of "activity" under the commerce clause, asking Staver how he would define the term and whether mental applications, or making a choice, would be considered an activity. Staver said the person has to be doing something that relates to commerce, so mental decisions would not be an activity. The commerce clause regulates physical activity, but a choice not to purchase health insurance is not an activity because it does not involve distribution, production or consummation of a tangible product with established interests in the market, he added.

Staver agreed with a court question that Congress has the power to regulate health insurance under the commerce clause but said it can regulate only those individuals who voluntarily participate in health insurance and cannot force people to get insurance. Staver disagreed, however, with a question from a judge asking whether the individual mandate clearly met requirements of the necessary and proper clause because it achieves a congressional aim, saying the individual mandate is not necessary. Further, the mandate does not even accomplish what Congress has said it will accomplish in controlling health care costs, he added.

Arguing for the government, U.S. Acting Solicitor General Neal Kumar Katyal said that the activity in question is participation in the health care market and that people use health care whether or not they think they will need to because one cannot opt out of it on an individual basis. Also, providers cannot opt out of providing care if a patient shows up destitute, which makes this market different, he added.

The government is focusing less on the words "activity" and "inactivity" but is asking what the commerce clause is about and whether the conduct that is being regulated has a substantial effect on commerce, and here, Congress made specific findings that when people self-finance health care, it increases costs to others and prices numerous individuals out of the market, Katyal argued.

In response to questions by the judges, Katyal said it's less about consumption and more about the payment. Congress is not asking people to buy something they wouldn't otherwise buy; everyone uses health care, Katyal added. He disagreed with a line of questioning from the judges that government is forcing people to be "responsible" and acting as "big brother" by requiring the purchase of health insurance.

A computer program randomly selected the three-judge panel, with Judges Diana Gribbon Motz, Andre M. Davis and James A. Wynn Jr. serving on the panel.

[Editor's Note: Full coverage will be in the May 18 issue of Mealey's Managed Care Liability Report. For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]